Pontiac council OKs complex deal to sell Phoenix Center deck

Michael Stephens,39, Facility Manager and Partner at Ottawa Towers, LLC stands in front of the sign to the Phoenix Center in Pontiac on Monday, July 27, 2015.
The Phoenix Center, an outdoor entertainment center on 6.7 acres has been closed since 2012.
(Photo: Jessica J. Trevino, Detroit Free Press)

After hearing citizens voice reminders of the "fire sale" sacrifice their city in dumping the Silverdome, members of the Pontiac City Council voted 7-0 Thursday night to sell the city's troubled downtown Phoenix Center parking garage in a complex deal with an Australian-based software company.

BoonEx has told the city it would relocate its North American headquarters from Atlanta to two office towers connected to the Phoenix Center.

In a deal with a closing date of Feb. 13, the city would sell the parking deck for $3 million but gain no money because of liens outstanding on the structure, which the city has failed for decades to maintain, attorneys at the meeting told city officials.

But the deal is a "win-win for the people of Pontiac" because it releases them from lawsuits with the office tower owners that could've ultimately cost the city more than $20 million, Mayor Deirdre Waterman said.

The Phoenix Center has long been mired in lawsuits, in need of major renovations and posing a constant drain on city coffers.

Waterman said she was thoroughly behind the deal with software developer BoonEx. The software company would buy the deck from the city but also purchase the deck's two attached eight-story office buildings, called the Ottawa Towers, which are owned by a California investor group, Waterman said.

"We'd have a two-way closing," she said, referring to the need for the city's deal to exactly coincide with the Ottawa Towers' sale to BoonEx. Council members voted, also 7-0, to waive Pontiac's usual auction process for selling city-owned property to expedite the sale.

The deal was "brought to us with sort of warp speed," and much of the complex negotiations were conducted during the year-end holidays, so that the buyers could consummate it quickly, she said.

"They're offering us a share of parking revenues plus the use of the rooftop amphitheater, and we can do this without making the $8 to $10 million in necessary repairs that the structure needs," she said.

In addition, the deal puts the big deck with its capacity of 2,800 cars back on city tax rolls while also ending the costly litigation with the owners of the Ottawa Towers, Waterman said.

The city has lost eight successive court decisions in lawsuits with the buildings' owners in an ill-fated, five-year quest to demolish the Phoenix Center. City council members have estimated that the city has spent more than $1 million on legal fees in its futile litigation with the Ottawa Towers.

Chuck Stephens, the on-site manager of Ottawa Towers and family member of the investment trust that owns the buildings, said Wednesday he couldn't comment on the proposed deal.

An look at the outside of the Phoenix Center in downtown Pontiac, Michigan on Saturday September 20, 2014.(Photo: Eric Seals, Detroit Free Press)

Kyle Westberg of Lake Orion, owner of West Construction and owner of Pontiac's restored performing-arts gem the Flagstar Strand Theater, called the deal "a fabulous opportunity for the city."

And the Rev. Alfred Johnson, pastor of Newman AME Church in Pontiac, said it could "start to make Pontiac great again," sparking a stunned silence, followed by laughter, as listeners realized his words resembled the campaign motto of President-elect Donald Trump's campaign.

"I guess I don't like that term, exactly," Johnson said, chuckling.

But like many in the audience, design consultant Jim Ross, whose office is in downtown Pontiac, voiced measured support after the vote.

"I'm concerned about how fast this happened," while still hoping it works out, Ross said

When it was built in the early 1980s, Pontiac's big parking deck and rooftop amphitheater was named the Phoenix Center because -- like the mythical Phoenix bird that died a fiery death, then was reborn from its own ashes -- the deck was going to trigger a massive downtown renewal.

But little else was realized of the elaborate renewal plan, and the deck soon became a drain on city coffers. For much of the last decade, it has been mostly shuttered and mired in lawsuits. Judges have ruled that the Ottawa Towers' owners have a deed-enshrined property right for use of the parking deck and would need to be richly compensated by the city if the deck were razed, perhaps by as much as $9 million, Waterman said.

The bottom line of the deal is that the city would get out from under that liability and walk away with about $3 million, Waterman said. In addition, it would not have to spend $2 million on demolition costs, she said. Finally, BoonEx would bring to the city new employees and a new high-tech business to occupy space in the Ottawa Towers, helping to solidify the city's growing identity as a high-tech hub, Waterman said.

The sale is not appealing but it's better than the alternatives, said Pontiac City Councilman Kermit Williams. The city has been backed into a corner and now must sell the asset at a bargain price, Williams said.

"I say it's like trying to sell your couch when your house is on fire," he quipped Wednesday night, chuckling.